According to Markit Economics/Stanbic Purchasing Managers Index readings for January headlined 47.5 compared to 46.9 in December. (Readings above 50 signal business improvement while those below signal deterioration in business activity).Driving the weakness was a spike in the operational cost environment on the back of currency depreciation in the month of January. Zambia’s private sector pulse has been in contraction since March 2019 dictated by similar key themes being lack of liquidity, currency depreciation and an elevated operational cost environment exacerbated by energy price risks.
“Business conditions remained subdued with push – through effects of rising inflation and a weak Kwacha leading to reduced output and an increase in purchase prices,” Stanbic Bank Head Global Markets Victor Chileshe said.
Purchasing Managers Index is a monthly proxy for gross domestic product and the persistent suppressed business conditions could weigh the copper producers growth pace for first quarter of the year.
Peer Benchmark Comparison
Uganda’s business tempo was robust and bullish at 58.8 (57.7 – Dec) as output growth was significant and companies continued to hire staff. Ghana’s seasonally adjusted headline printed 50.7 for January characterised by softened output, a one year high job creation rate weighed by currency depreciation effects while Nigeria had a bullish start to the year at 55.9 (56.8 – Dec) with sharp rises in new orders backed by modest employment but weighed by 15 month high purchase price inflation. Kenya’s business activity slid amidst weak aggregate demand to 49.7 (53.3 – Dec). South Africa’s private sector pulse remains weak at 48.3 (47.6 – Dec) impacted by cost inflation pressure and general weak sentiment as the most industrialised economy on the continent struggles with risks to growth on the back of rolling blackouts.
The Kwacha Arbitrageur
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